{"id":2859,"date":"2016-02-18T00:01:22","date_gmt":"2016-02-18T05:01:22","guid":{"rendered":"http:\/\/terrencemetz.com\/?p=2859"},"modified":"2026-04-21T13:36:59","modified_gmt":"2026-04-21T17:36:59","slug":"total-factor-productivity","status":"publish","type":"post","link":"https:\/\/mgrush.com\/blog\/total-factor-productivity\/","title":{"rendered":"How to Calculate Total Factor Productivity as an Indicator"},"content":{"rendered":"<h2>Measure the increase in productivity per employee using the formula for\u00a0Total Factor Productivity.<\/h2>\n<p><span style=\"font-size: 14pt;\">Accomplishment may be <a href=\"https:\/\/mgrush.com\/blog\/smart-measures\/\" target=\"_blank\" rel=\"noopener noreferrer\">measured<\/a> by the increase in productivity per employee. For many, calculating productivity has been nebulous and <a href=\"https:\/\/mgrush.com\/blog\/definition-tool\/\" target=\"_blank\" rel=\"noopener noreferrer\">argumentative<\/a>.\u00a0Total Factor Productivity permeates\u00a0industries from service and software to the manufacturing of products and goods.\u00a0Since no formula\u00a0of any value goes without an acronym, call it the TFP. As a calculation, TFP looks like this:<\/span><\/p>\n<div id=\"attachment_2860\" style=\"width: 310px\" class=\"wp-caption alignright\"><img wpfc-lazyload-disable=\"true\" loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-2860\" class=\"wp-image-2860 size-full\" src=\"https:\/\/mgrush.com\/blog\/wp-content\/uploads\/2016\/01\/total-factor-productivity-e1542143800679.png\" alt=\"How to Calculate Total Factor Productivity as an Indicator\" width=\"300\" height=\"180\" \/><p id=\"caption-attachment-2860\" class=\"wp-caption-text\"><span style=\"font-size: 14pt;\"><strong>Total Factor Productivity<\/strong><\/span><\/p><\/div>\n<h3>XX% <strong>CiR<\/strong>\u00a0 \u2212\u00a0(0.4 <strong>constant<\/strong> * <span style=\"font-size: 10pt;\">XX<\/span>% <strong>CiA<\/strong>) =\u00a0<strong>TFP<\/strong><\/h3>\n<h3><strong>Here is an explanation for Total Factor Productivity:<\/strong><\/h3>\n<p><span style=\"font-size: 14pt;\"><strong>CiR<\/strong> represents the &#8220;Change in Revenue (per employee)&#8221;. If an <em>illustrative<\/em> small company or business unit with $218 million has 1,400 employees has a revenue of $155,000 per employee. If the following year they grow to 1,500 employees and realize revenue of $257 million, they will realize $171,333 per employee or a positive change of 14.2 percent.<\/span><\/p>\n<p><span style=\"font-size: 14pt;\"><strong>Constant<\/strong> represents a baseline and 0.4 is being used, although it could be modified. Be careful, however, as MIT Professor <a href=\"http:\/\/www.nobelprize.org\/prizes\/economic-sciences\/1987\/solow\/biographical\/\" target=\"_blank\" rel=\"noopener noreferrer\">Robert Solow<\/a> received a Nobel Memorial Prize for his work. He discovered that 0.4 represents the best overall constant to use. If used by others, it also allows for direct comparison.<\/span><\/p>\n<p><span style=\"font-size: 14pt;\"><strong>CiA<\/strong> represents the &#8220;Change in Assets (per employee)&#8221;. If our illustrative company or business unit grows its assets from $60,000 per employee to $70,000 per employee, it will realize a 16.7 percent increase in its CiA.<\/span><\/p>\n<p><span style=\"font-size: 14pt;\">Therefore, using our illustrative results above, the calculation would look like this:<\/span><\/p>\n<p><span style=\"font-size: 14pt;\">14.2% <strong>CiR \u2212<\/strong>\u00a0(0.4\u2282 * 16.7% <strong>CiA<\/strong>) = 7.5 percent\u00a0<strong>TFP<\/strong><\/span><\/p>\n<p><span style=\"font-size: 14pt;\">TFP now represents gains made in labor productivity, less gains from investing in capital. TFP can be driven by various <a href=\"https:\/\/mgrush.com\/blog\/scenario-planning-2\/\" target=\"_blank\" rel=\"noopener noreferrer\">factors<\/a> including cost cutting, increased market share, <a title=\"Product Owner \u2014 Creating Products that Customers Love\" href=\"https:\/\/mgrush.com\/blog\/product-owner\/\" target=\"_blank\" rel=\"noopener noreferrer\">new products<\/a>, or getting something out of idle assets (e.g., vacant property). Innovation and new technology drive or propel the USA economy for increasing TFP, including hardware (e.g., GPS or geo-positioning systems equipment) and software improvements (e.g., resulting in fleet and fuel optimization).<\/span><\/p>\n<p><span style=\"font-size: 14pt;\">TFP measures the revenue for each employee and also factors in capital assets and investments in equipment, information, and technology.<\/span><\/p>\n<h4 style=\"text-align: center;\"><span style=\"color: #ff0000; font-size: 14pt;\"><strong>______<\/strong><\/span><\/h4>\n<p><span style=\"font-size: 14pt;\">Don\u2019t ruin your career by hosting <a href=\"https:\/\/mgrush.com\/blog\/bad-meetings\/\">bad meetings<\/a>. Sign up for a <a href=\"https:\/\/mgrush.com\/public-facilitation-training\/\" target=\"_blank\" rel=\"noopener\">workshop<\/a> or send this to someone who should. <em><a href=\"https:\/\/web.archive.org\/web\/20260106090117\/https:\/\/mgrush.com\/\">MGR<span style=\"font-size: 12pt;\">USH<\/span><\/a><\/em> workshops focus on meeting design and practice. Each person practices tools, methods, and activities every day during the week. Therefore, while some call this immersion, we call it the road to building high-value facilitation skills.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Measure the increase in productivity per employee using the formula for\u00a0Total Factor Productivity. Accomplishment may be measured by the increase in productivity per employee. For many, calculating productivity has been nebulous and argumentative.\u00a0Total Factor Productivity permeates\u00a0industries from service and software to the manufacturing of products and goods.\u00a0Since no formula\u00a0of any value goes without an acronym, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2860,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_convertkit_post_meta":{"form":"-1","landing_page":"","tag":"0","restrict_content":"0"},"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[453185968,453185955],"tags":[453192314,453191146,453192313,453191145],"class_list":["post-2859","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis-methods","category-meeting-tools","tag-change-in-revenue","tag-increase-in-productivity-per-employee","tag-robert-solow","tag-total-factor-productivity"],"yoast_head":"<!-- This site is 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However, he also observed meetings that worked. What set them apart? A well-prepared leader who structured the session to ensure participants contributed meaningfully and achieved clear outcomes. Throughout his career, Metz, who earned an MBA from Kellogg (Northwestern University) experienced and also trained in various facilitation techniques. In 2004, he purchased MG RUSH where he shifted his focus toward improving established meeting designs and building a curriculum that would teach others how to lead, facilitate, and structure meetings that drive results. His expertise in training world-class facilitators led to the 2020 publication of Meetings That Get Results: A Guide to Building Better Meetings, a comprehensive resource on effectively building consensus. Grounded in the principle that \u201cnobody is smarter than everybody,\u201d the book details the why, what, and how of building consensus when making decisions, planning, and solving problems. Along with a Participant\u2019s Guide and supplemental workshops, it supports learning from foundational awareness to professional certification. Metz\u2019s first book, Change or Die: A Business Process Improvement Manual, tackled the challenges of process optimization. His upcoming book, Catalyst: Facilitating Innovation, focuses on meetings and workshops that don\u2019t simply end when time runs out but conclude with actionable next steps and clear assignments\u2014ensuring progress beyond discussions and ideas.","sameAs":["http:\/\/MGrush.com","http:\/\/www.facebook.com\/FacilitationTraining\/","https:\/\/www.linkedin.com\/in\/terrencemetz\/","@teammetz","https:\/\/x.com\/TerrenceMetz","https:\/\/www.youtube.com\/watch?v=j4x3-Qo9Ez4"],"birthDate":"1955-09-23","gender":"male","jobTitle":"Managing Director","worksFor":"MG Rush Facilitation","url":"https:\/\/mgrush.com\/blog\/author\/teammetz7\/"}]}},"jetpack_featured_media_url":"https:\/\/mgrush.com\/blog\/wp-content\/uploads\/2016\/01\/total-factor-productivity-e1542143800679.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/posts\/2859","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/comments?post=2859"}],"version-history":[{"count":0,"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/posts\/2859\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/media\/2860"}],"wp:attachment":[{"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/media?parent=2859"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/categories?post=2859"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mgrush.com\/blog\/wp-json\/wp\/v2\/tags?post=2859"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}